See You in Court -- Not Problem: Reducing legal fees for international-distribution agreements

Solution: Interactive software to draw up contracts

Payoff: High-quality service at a reasonable cost

When Munchkin Inc., a $15-million manufacturer and designer of baby bottles and other products for infants, needed its second international-distribution agreement, chief financial officer Betty Kayton didn't like either of her two choices: paying dearly to have her lawyer draw up a new contract that would be almost identical to Munchkin's first or going it alone using the first contract as a template.

With lawyers costing $200 an hour, the do-it-yourself approach was a temptation. "Many managers are tired of paying a lawyer an exorbitant fee just to reinvent the wheel," says Kayton. But, she notes, doing it yourself can lead to legal troubles that may cost you more than hiring a lawyer in the first place.

Luckily for Munchkin, its law firm, Boston-based Hale and Dorr (617-526-6000), offered an appealing compromise: interactive software that can automatically draw up distribution agreements. The software prompted Kayton through a series of questions about her potential distribution agreement and then used her responses to generate a customized international-distribution contract.

The program saved Kayton from making costly gaffes. Take its response to contract length, for example. The program asked Kayton how long Munchkin planned to keep the agreement in force in a particular country. When Kayton entered a time period that turned out to be longer than allowed there, the program warned her about the discrepancy. The application also cautioned Kayton at several points that various clauses would put either her or her partner at a disadvantage.

A typical international-distribution agreement used to cost Munchkin between $3,000 and $5,000 to draw up. Using the software, it cost $1,500. Munchkin got the software free from Hale and Dorr, though it had to pay $300 for a software package called Caps User, from Capsoft, in order to run it. Munchkin pays the law firm only for outputting and reviewing the agreements. Along with the contract, Hale and Dorr returns a legal memo that describes all the foreign laws that could affect the agreement.

The interactive software has helped Munchkin avoid disaster. In one instance, Munchkin prepared an agreement granting a distributor trial exclusivity. Kayton included the option to terminate the contract if the distributor could not make its quota. When Munchkin received the contract from Hale and Dorr, an attached warning stated that if Munchkin terminated the contract, it could be liable for liquidating the distributor's inventory. "That warning saved us from making what could have been a costly error," says Kayton.

While Kayton estimates that the software has significantly reduced Munchkin's legal costs, she is quick to caution that the application is only as good as the lawyers behind it. "An expert system does not replace real attorneys. It merely cuts down the time we need to spend with them," she explains. "When I am sitting with my customer and I am ready to shake hands, I always say, 'I think this is how it's going to work, but I have to check with our attorneys.' "

Kayton's risk aversion has paid off. Munchkin now distributes in more than 20 countries, and since it's been using the software -- almost a year now -- the company has not encountered legal trouble. "We work out all the ground rules ahead of time," says Kayton. "There are no surprises."

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Internet Connect Problem: Matching importers and exporters around the world

Solution: An Internet bulletin board

Payoff: Expanded client base and improved response to client requests

Tom Doupnik needed a metric ton of pinto beans. His client, an importer in Zimbabwe, had to have the beans ASAP. Eighteen months earlier the task would have been nearly impossible, though Doupnik would have spent day and night on the phone searching. But now, with the Internet, finding pinto beans was no problem.

Doupnik, owner of Country to Country, an import-export information-brokerage firm in Austin, Tex., is a member of TradeNet, an Internet "mailing list" -- a sort of electronic bulletin board -- for international importers and exporters. To locate his beans, Doupnik posted a message to TradeNet; within two days he found a reply in his mailbox from a bean-laden supplier. Later, TradeNet helped Doupnik match a client in the Czech Republic who needed to import pork intestines for sausage casings with a supplier in China.

TradeNet is one of the many growing areas of the Internet that has been cordoned off solely for business use. "It's a way to make connections without getting flamed or hassled," explains Doupnik. The only problem: many of Doupnik's contacts don't own a computer. The telephone's not dead yet.

Solution: Modeling software that shows, rather than tells, how designs work

Payoff: Ability to develop and market electronics worldwide

When Bob Katz landed a contract to design a cellular phone for a Chinese manufacturer, he had one problem: how was he going to talk with Chinese engineers? "Our Cantonese wasn't what it should be," jokes Katz, CEO of Katz Design Inc., a three-person industrial-design and product-development firm in Montreal.

The answer turned out to be simple: let pictures replace words. Now instead of hiring interpreters, Katz uses his Silicon Graphics computers to get his meaning across.

Running customized Pro/Engineer software, from Parametric Technology (617-398-5615; $16,000 to $20,000), on Silicon Graphics machines, Katz creates three-dimensional computer models to facilitate his design of cellular phones and other electronic devices. Those computer models also turn out to be great communications tools, which allow him to show, rather than tell, his clients how designs work.

When the Chinese engineers didn't understand how one of the chips fit onto the phone's circuit board, for example, Katz used the software to mimic a flight simulator -- and virtually flew the Chinese viewers into a three-dimensional model of the inside of the phone. Once there they could hover above the chip to examine its placement.

"Flying" between the inside and outside of the phone model also enabled the Chinese engineers to grasp the way the components and fasteners were aligned. "You feel as though you are moving within those tiny spaces, and the experience speaks to you," says Katz. "The Chinese instantly understood what we had done with our design."

Recently, Katz began using a hardware device called Video Creator, also from Silicon Graphics, to develop videos of the excursions through his computer model. That has allowed engineers to study the product designs when a workstation isn't available. In addition, clients have used the videos to educate their sales forces about new-product development and even to sell products to customers before prototypes are available.

"The planet is our market," says Katz enthusiastically, "and now we don't have to worry that not everyone on the planet speaks English."